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CORPORATE OWNERSHIP, GOALS, and GOVERNANCE - Research Paper Example

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CORPORATE OWNERSHIP, GOALS, and GOVERNANCE

Blair looks at the rights of owners and concludes that shareholders do not have sufficient rights to be called the corporate owners. The article details the rights that owners have such as the right to acquire and dispose off assets and a right to get profits generated by the asset and its sale. The article claims that shareholders do not possess all these rights instead it is distributed to various stakeholders. The article argues that since these rights are not possessed by shareholders, it cannot be said that they are the owners of companies. The author also says that calling shareholders the owners of companies cannot guarantee them the rights of owners. However, the author in conclusion advocates for not distributing these rights because they may discourage investment. The distribution of rights between the shareholders and managers is also discussed. The shareholders, given that they contribute capital, have a right to elect the directors. Directors are the ones who make investment decisions on behalf of the shareholders. The shareholders do not possess the ultimate right to control the decision making of managers. The author says that this is because in large corporations the shareholders may be so many that even the managers may not know some of them. Shareholders also have limited liability and so cannot be responsible for the debts of firms. This author says this denies them the ultimate right to say that they are the owners of the firms. To support his argument, the author looks at how corporations create wealth. She says that wealth creation in a firm is not just because of the share capital of shareholders, but other stakeholders such as customers, employees and suppliers also make special investment contributions that are important to the company. The authors say that all stakeholders in the firm are investors. She gives an example of employees who dedicate their time and human resource to serve the firm. Even though they are compensated, they need to be recognized in the ownership of the firm. In conclusion the article discourages the view of looking at ownership of firms in terms of assets invested. It argues that the employees also create wealth for firms and their contribution must be respected. The article puts up a strong defense for inclusion of other parties, especially the employees in the ownership of firms. This view is good, but it fails to state what level of ownership can these stakeholders posses. Inclusion of employees as owners of firms just by virtue that they help in wealth creation would present a complex scenario in the ownership and management of firms. The only recommendation would be that the employees should be encouraged to buy shares in the firm so that they can be part of owners. “Corporate Ownership and Governance” by Connelly Brian et al The aim of this article is to demonstrate that corporate governance is not a reserve of the board of directors but also owners participate in the governance of firms. They do this by looking at the different forms of corporate ownership and how they influence decision making in the firm. They divide this in two categories, outside ownership and inside ownership. Inside Ownership This is when stock is held by the insiders. These insiders tend to make decisions that favor the ...Show more

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Insert Name Insert Grade Course Insert Insert Date Corporate Ownership, Goals, and Governance Introduction This paper is a summary of four journal articles dealing with the topic corporate ownership, goals and governance. The first journal is by Connelly Brian et al titled “Ownership as a form as Corporate governance”…
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